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Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage — to move in the opposite direction.”
-Albert Einstein“One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity. Simplicity is the key to brilliance.” –Bruce Lee
One thing that I hear from readers and reviewers of my early Darvas book is that they think it is too simple. They desire more complexity, it can not be that simple to build six figure accounts. Well, all I can say is, “Yes, it is.” I have now averaged approximately 18% a year for a decade in my active trading and investing accounts. This year has been an absurd 62.5% return with my new over laying of options on my trend trading system. So I am not discussing theory I am speaking from personal experience. Trading price action does not have to be overly complicated to be successful.I do not need multiple monitors, complex software, or to actively sit in front of the computer all day. I do need to observe capital flow from chart analysis and take my stops. I do have to let my winners run as far as they will go using trailing stops and cut losses when they are triggered. At the end of the day trading is about being on the right side of capital flow. It is about using charts to buy at key times when the odds are in your favor. Trading is about learning trading methods that make money over the long term then having the discipline and faith to follow those methods. So much of what traders waste their time on with so-called knowledge from others is little more than the noise of opinions from people without proven trading performance. If you want to make money in trading go toward making it more simple not more complicated.
Keep your trading clean, keep what makes you money discard what does not.
Pick a trading style that fits your personality, focus on it and master it.
Focus your time on social media to following only people that teach you how to become a better a trader, ignore the ones that do not add value to your trading.
Keep down the noise of others opinions, turn up your focus on price action that is revealed on the charts.
Do more of what makes you money, less of what loses you money.
Focus your market studies on your trading style not a different method.
Decrease the number of indicators that you use to only the most relevant. Price is the ultimate indicator.
Quit chasing the Holy Grail of trading, there isn’t one, trading is something you just have to work for. Focus making yourself a great trader and the money will follow.
Write a simple trading plan that anyone can understand with your own rules for a Trading Method, Risk Management, and Psychology. Ten for each is plenty.
Focus like a laser on following your own plan, ignore distractions that take you off your own game.
India, the second-biggest grower of rice, wheat and sugar, will review its export rules and consider curbing the amount of food crops that traders can stockpile as the worst monsoon in three years fuels a rally in prices.
“I am concerned about the deficient rain,” Food Minister K.V. Thomas told reporters after a meeting with Prime Minister Manmohan Singh yesterday. “We will get a clear picture about the situation after 15 days.”
Rice planting dropped 19 percent to 9.68 million hectares (24 million acres) this year from 12.04 million hectares a year earlier, the farm ministry said July 13. Photographer: Prashanth Vishwanathan/Bloomberg
July 17 Tom Flora, a farmer from Delphi, Indiana, Mike Zuzolo, president of Global Commodity Analytics in Lafayette, Indiana, and Wes Stockdale, a farmer from Veedersburg, Indiana, talk with Bloomberg’s Tony C. Dreibus about the impact of the U.S. drought on Midwestern corn crops and agriculture-related business. The condition of the U.S. corn crop worsened for a sixth straight week, the longest such streak since 2003, as the worst Midwest drought in a generation spread, the Department of Agriculture said yesterday. (Source: Bloomberg)
Dry weather from the U.S. to Australia has parched fields, pushing up global corn and wheat prices and curbing a decline in food costs. El Nino weather conditions, which can parch Asia and bring cooler weather to the U.S., may develop during July to September, the World Meteorological Organization said June 26. India extended a ban on exports of sugar, rice and wheat in 2009, following the weakest monsoon since 1972.
“One of the big concerns about a repeat of the food crisis is whether we are likely to see the export policy in key producing and exporting countries changing,” Sudakshina Unnikrishnan, an analyst at Barclays Plc in London, said by phone. “An underperforming Indian monsoon does raise concern that potentially there could be some sort of export curbs.”
More than 235 million farmers depend on the monsoon for crops such as rice, peanuts, soybeans and cotton. Sowing of monsoon crops begins in June and harvesting starts in October.
Consumer-price inflation exceeded 10 percent in June to remain the fastest among major economies. The consumer-price index climbed 10.02 percent from a year earlier, compared with 10.36 percent in May, the Statistics Ministry said. Singh is banking on higher farm output, which accounts for about 15 percent of gross domestic product, to curb food prices.
Miss Forecast
The monsoon, which represents more than 70 percent of annual rainfall, was 22 percent less than the 50-year average over June 1 to July 18, delaying sowing of corn and rice crops. Weather in July, the wettest month in the June-September rainy season, may miss a forecast of normal rain, L.S. Rathore, director general of the India Meteorological Department, said in an interview on July 16.
India, also the world’s biggest sugar and palm oil consumer, is studying the option of imposing a stockholding limit on food crops, Thomas said yesterday.
“With the monsoon playing hide and seek, it is a challenge for our farmers and scientists to maintain the food-grain output achieved in the last two years,” Farm Minister Sharad Pawar said July 16 in New Delhi. The country won’t ban exports of rice and wheat as it has ample stockpiles, he said.
Rice Planting
Soybeans on the National Commodity and Derivatives Exchange Ltd. in Mumbai almost doubled in the past year, while sugar jumped 22 percent. Wheat has surged 18 percent in the past year, while corn futures have jumped 29 percent.
Food-grain production reached a record 257.44 million metric tons in the year ended June 30 after a second year of normal rains boosted harvests, the farm ministry said. That prompted the government to lift curbs on exports of rice and wheat last year.
Rice planting dropped 19 percent to 9.68 million hectares (24 million acres) this year from 12.04 million hectares a year earlier, the farm ministry said July 13. The oilseeds area declined 22 percent to 6.77 million hectares from a year earlier, while corn was sown over 2.17 million hectares, less than the 3.13 million hectares a year earlier, it said.
June inflation slows to 7.25% YoY India’s wholesale price index (WPI) rose a lower-than-expected 7.25% in June from a year earlier, mainly driven by higher food prices, government data showed on Monday.
India’s wholesale price index (WPI) rose a lower-than-expected 7.25% in June from a year earlier, mainly driven by higher food prices, government data showed on Monday.
Analysts on average had expected an annual rise of 7.62%, a Reuters poll showed. Wholesale prices provisionally rose 7.55% in May.
The annual reading for April was upwardly revised to 7.5% from 7.23%, the government said in the release.
India’s largest domestic institutional investor – Life Insurance Corporation of India (LIC India) used the sluggish market conditions in FY12 to increase its exposure to equities. The Big Daddy of insurers invested Rs 49,960 crore during the year as against Rs 43,224 crore in FY11, an increase of 26% year-on-year.
At the same time, a combination of falling equity prices and redemptions shrunk LIC’s unit linked insurance policy (ULIP) portfolio by 20% to Rs 1,55,377 crore as on March 31, 2012, a senior official from the corporation told on condition of anonymity.
“In the subdued equity market ULIP portfolio however, has booked a profit through the sale of equity, thereby registering a growth in the profit by nearly 10% over the previous year. In FY12, our total equity portfolio has recorded a significant appreciation on mark-to-market basis even after booking healthy profit during the year,” said the source.
The corporation which has an investment portfolio of over Rs 8 lakh crore plans to invest around Rs 60,000 crore in the equity market in 2012-13, the official said.
In 2011-12, the 30-share BSE Sensex dropped 10.50% as against a rise of nearly 11% in 2010-11. The sharp fall was account of global economic weakening coupled with domestic factors like higher rate of inflation and low GDP growth. The corporation’s total equity portfolio stands more than Rs 8 lakh crore.
During the financial year LIC, a wholly government owned entity, increased its stake in many capital-starved public sector banks. The widening fiscal deficit prompted the government of India, a major stake holder in those banks, to devise a strategy to infuse capital by way of hiking LIC’s stake.
For example, LIC raised stake in Allahabad Bank to 12.93% in Q4 compared with 7.95% in Q1, FY12. During the same period, it upped its holdings from 3.14% to 12.36% in Union Bank of India ; from 7.93% to 10% in Uco Bank ; from 10.43% to 14.53% in Syndicate Bank, among others.
Similarly, LIC played a key pivotal role in the ONGC ‘s share sale in March, 2012. It reportedly acquired 37.71 crore shares of the 42.04 crore shares on offer. LIC’s ownership in the company rose from 3.09% to 7.77% in between June and March quarter, FY12. This decision drew criticism from market participants, who alleged that LIC was forced to bail out the government.
Besides, two private banks also figured in the investment list of LIC during the same period. They included Axis Bank (from 0.86% to 9.69%) and Yes Bank (from 1.90% to 2.38%).
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Successful trading is based mainly on trying to follow the right trading plan. But even the most disciplined can be affected sometimes by certain human tendencies that can turn that around. There are certain human quirks that seem to affect trading but most traders don’t seem to be aware of. Here are some of them.
Fear Of the Unknown
It is a human tendency to feel fear about something that one doesn’t know. This may limit traders on making those calculated risks. Some may just stay on a certain comfort zone, maintain a position where they have an idea of what the results may be. But this can also lead to missing out on valuable opportunities that may be present at one time or another. It can sometime be an unfounded fear that can seriously affect one’s trading success.
Information Bias
Some traders may not be aware of this, but information bias can also have a serious effect on trading. It is a tendency to accept only data and information that one likes to hear. Upon accepting this information, they seemed more biased to it, even though it may be more of an opinion than fact. In the process, some traders may rely more on information based on opinions rather than the facts itself. This may cause a certain trading strategy to fail because inputs used are not necessarily the real facts currently happening in the market.
The Thrill Of Anticipation
It may not be that easy to understand this common human tendency since most people go through it. Some may even call it daydreaming, but the thrill of anticipation of a future event can also affect trading. Anticipating something good that will happen is not always bad. But sometimes some people are more excited and relish the thrill of anticipation that they sometimes fail to act upon it and do something to make it a reality. In traders, anticipating too much rather than acting on it can certainly affect trading performance and success.
“Many people work hard……the successful ones are the ones who work intelligently.”
I phrased it earlier (in the The productivity trap) this way:
“WHAT to do and HOW to do is more important than the amount of things you achieve.”
Or again in other words:
“It is not enough to work hard, it is important to work on the right thing in a good way.“
An old phrase also says: “Switch on your brain before you do something.“ In the last weeks I have seen pretty good examples where people worked hard on solutions where the goal could have been achieved better and easier by thinking simpler and different. Another phrase says: “It’s lonely in the saddle since the horse died.“
